Having more active people in the workforce has not yielded increased productivity. This means that there are other factors contributing to the U.K.’s productivity problem. Quarterly U.K. productivity figures recently released by the Office for National Statistics (ONS) once again show that the U.K. still struggles to find the missing pieces to solve its productivity puzzle. If we continue on this path, the U.K. economic slowdown in the next few years risks being worse than in any other comparable large advanced economy.
Despite a record employment rate and strong wage growth, we have a poor record when it comes to boosting productivity. In fact, according to the ONS, it has been lower over the past decade than at any time in the 20th century and lags well behind other members of the G7. Trying to improve our country’s productivity is a great challenge, which is made even tougher by Brexit uncertainty.
To compete on the global stage and raise our efficiency, we need to embrace and invest in digital transformation, but this is just the tip of the iceberg. Having a well-trained, tech-savvy workforce able to leverage new and emerging technologies will make or break our success.
Evidence suggests that we are still far from reaching our target. In a recent report by both the British Chamber of Commerce and Totaljobs, 75% of companies in the U.K. reported a shortage of suitable candidates to fill in their vacancies. In addition, a 2017 Chartered Institute of Personnel and Development (CIPD) report revealed that U.K. companies generally spend less on training than other major EU economies. Our own 2018 Mind the Skills Gap research highlighted that one in four U.K. workers was not participating in any in-work training.
To make the most of the digital opportunity, we have to tackle the skills issue from the demand side (employers), the supply side (employees), and through enhanced government policy. So what can we do in practice?
- Encourage employees to overcome their complacency and develop a mindset that values reskilling themselves throughout their careers, whether that’s through continuing professional development, gaining further academic qualifications, or undertaking an apprenticeship.
- Take an agile approach within organizations to support ongoing reskilling and reinvestment in the workforce. This includes reviewing organizational structure to identify future needs, finding new ways of retaining and sourcing talent, and continuously training employees to enhance their capabilities through the empowered use of technology.
- Review our national education and skills policies, in particular the Apprenticeship Levy as it currently stands. Expand it to provide for reskilling and lifelong learning; shift the focus to delivering sustainable careers.
Getting the formula right will be crucial if the U.K. wants to create a highly skilled and agile workforce that is competent and tech-savvy enough to solve its productivity puzzle.
The original piece by Andrew Harding “Tackling the U.K.’s productivity puzzle” was published in Financial Director on 9 July 2019.